Po Valley slumps on production warning

Shares in Po Valley Energy more than halved today after the Perth-based company warned that production and reserves at its Castello gas field in Italy may fall.

In a statement today, Po Valley said there had been a faster than expected rate of decline in wellhead pressure at Castello, which could lead to lower production rates and substantially reduced reserves.

Castello was fired up late last year and has a daily production rate of 60,000 cubic metres, less than the current maximum pipeline entry rate of 70,000 cubic metres a day.

Castello is Po Valley's first gas field to be brought online.

Po Valley said today it is investigating possible reasons why the wellhead flowing pressure is declining and will carry out downhole pressure measurements, assess the impact on reservoir performance and projected field life and reassess the field's gas reserves.

Castello currently has proven reserves of 4.6 billion cubic feet.

Po Valley expects to update the market in June.

Shares in the company slumped 41 cents, or 54 per cent, to an intraday low of 35c before rallying slightly to 38c at 14:51 AEST.